Accounting Formulas for Import and Export Agency Business, Do You Really Know How to Use Them?

In the complex stage of international trade, import and export agency business is of vital importance. For many enterprises, understanding and skillfully using relevant accounting formulas is like having the key to open the door to profits. Today, let's jointly explore the mysteries of accounting formulas for import and export agency business in depth.

First, let's look at import agency business. The calculation of the cost of imported goods is a core link. The total cost of imported goods usually consists of parts such as the purchase price of the goods, foreign freight, insurance premium, import duty, consumption tax, value-added tax, etc.

• Purchase Price of Goods: That is, the price of the goods agreed with foreign suppliers, generally expressed in trade terms such as FOB (Free on Board), CFR (Cost and Freight), or CIF (Cost, Insurance and Freight). For example, Mr. Zhang entrusted Zhongshitong to act as an agent for importing a batch of goods, and the contract stipulated an FOB price of 100,000 US dollars.
• Foreign Freight: The transportation cost from the foreign port of shipment to the domestic port of destination. Suppose the foreign freight for this batch of goods is 5,000 US dollars.
• Insurance Premium: The cost of purchasing insurance for the goods during transportation. Insurance Premium = CIF Price × Insurance Rate × Insurance Mark-up (usually the insurance mark-up rate is 110%). If calculated based on the CIF price, the calculation of insurance premium is essential.
• Import Duty: Import Duty = Customs Dutiable Value × Duty Rate. The customs dutiable value is generally the CIF price. Suppose the duty rate for this batch of goods is 10%, and if the CIF price is 105,000 US dollars (including a freight of 5,000 US dollars), then the import duty = 10.5×10% = 10,500 US dollars.
• Consumption Tax: For some specific goods such as tobacco, alcohol, cosmetics, etc., consumption tax needs to be paid. Ad Valorem Consumption Tax = (Customs Dutiable Value + Import Duty) ÷ (1 - Consumption Tax Rate) × Consumption Tax Rate.
• Value-Added Tax: Value-Added Tax = (Customs Dutiable Value + Import Duty + Consumption Tax) × Value-Added Tax Rate.

The import agency handling fee is generally collected at a certain proportion of the value of imported goods. For example, Zhongshitong may collect an agency handling fee at 3%. Taking a goods value of 100,000 US dollars as an example, the handling fee = 10×3% = 3,000 US dollars.

The accounting of export agency business is also complex and crucial. The sales revenue of exported goods is recognized based on the FOB price.

• If Ms. Li entrusted Zhongshitong to act as an agent for exporting a batch of goods, and the transaction price was a CIF price of 200,000 US dollars, among which the foreign freight was 8,000 US dollars and the insurance premium was 2,000 US dollars, then the FOB price = CIF price - Foreign Freight - Insurance Premium = 20 - 0.8 - 0.2 = 190,000 US dollars.
• Tax Refund for Exports is an important part of income in export business. Tax Refund Amount = Input Tax Amount of Exported Goods - Tax Amount Not Subject to Tax Refund for Exported Goods. Tax Amount Not Subject to Tax Refund for Exported Goods = FOB Price of Exported Goods × Exchange Rate of RMB to Foreign Currency × (Value-Added Tax Rate - Tax Refund Rate). Suppose the value-added tax rate for this batch of goods is 13% and the tax refund rate is 10%, and the exchange rate is 6.5, then the tax amount not subject to tax refund for exported goods = 19×6.5×(13% - 10%). Tax Refund Amount = Input Tax Amount - Tax Amount Not Subject to Tax Refund for Exported Goods.
• The export agency handling fee is generally also collected at a certain proportion of the value of exported goods, such as 2%. Then the handling fee = 20×2% = 4,000 US dollars.

In the accounting of import and export agency business, accurately using these formulas can help enterprises clearly grasp costs and benefits and make more informed decisions. Whether it is an importer or an exporter, when cooperating with professional agency companies such as Zhongshitong and making good use of these accounting formulas, they can move steadily in the tide of international trade. I hope everyone can continuously practice and summarize in actual business to better control the financial context of import and export agency business.